Collusive Insolvency Proceedings To Frustrate NHAI's Case Attract IBC Section 65: NCLT Mumbai

The National Company Law Tribunal (NCLT), Mumbai, on 5 November held that insolvency proceedings initiated through a collusive arrangement to frustrate pending restitution and contempt proceedings against a corporate debtor amount to malicious initiation under Section 65 of the Insolvency and Bankruptcy Code (IBC), 2016.

A Bench of Judicial Member Vinay Goel and Technical Member Charanjeet Singh Gulati allowed an application filed by the National Highways Authority of India (NHAI) seeking dismissal of the Section 9 insolvency petition filed by Apkon Ventures Private Limited against JAS Toll Road Company Limited. It said:

“A debtor that signs a settlement acknowledging liability and then resists the claim on merits is not conducting a genuine contest. A party that is serious about resisting an insolvency petition does not stay silent through the notice, the settlement and the restoration, and raise defences only when an intervener appears.”

Apkon filed the Section 9 petition on 26 April 2024, claiming approximately Rs. 1.06 crore towards highway overlay work. The parties subsequently entered into a settlement for Rs. 1.20 crore on 9 January 2025, following which Apkon withdrew the petition on 4 February 2025.

After the settlement cheques were dishonoured, Apkon sought restoration of the petition on 22 June 2025. The Tribunal restored the petition on 9 October 2025. Meanwhile, NHAI was pursuing restitution of excess toll collections and contempt proceedings against JAS Toll Road before the Delhi High Court.

The Tribunal noted that JAS Toll Road had not disputed Apkon's claim upon receiving the demand notice, had entered into a settlement acknowledging its liability and had not opposed restoration of the insolvency petition. It raised objections to the claim on merits only after NHAI intervened. It found this conduct inconsistent with a genuine contest of the operational creditor's claim.

On NHAI's locus standi, the Bench held that a person whose legal rights are affected may bring allegations of collusion or malicious intent to its notice even before admission of a Section 9 petition. It further held that allegations of malicious initiation can be examined at the pre-admission stage under Section 65 of the IBC.

It concluded that the petition had been filed, withdrawn pursuant to a settlement and subsequently revived as part of an arrangement to frustrate NHAI's restitution and contempt proceedings.

Accordingly, the NCLT dismissed the insolvency petition and imposed a penalty of Rs. 2.5 lakh on both parties, directing them to deposit the amount in the Prime Minister's National Relief Fund within two weeks.

For the Applicant: Advocates Abhay Gupta, Arpit Sharma and Anshuli

For the Operational Creditor: Advocates Mahek Saudagar i/b Yahya Batatawala

For the Respondent: Advocates Omkar Deosthale a/w Nisha Kaba, Abhijit Singh